Court File and Parties

Court File No.: 554/06

Released: 20070510

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Re: MAREK KOLASA Plaintiff (Respondent on Appeal)

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1408803 ONTARIO LTD. (c.o.b. DAEWOO THORNHILL) Defendant (Appellant)

Before: Lederman, Swinton and H. Spiegel JJ.

Counsel: Piotr Szajak for the Plaintiff (Respondent on Appeal) Samy Ouanounou for the Defendant (Appellant)

Heard at Toronto: April 23, 2007

ENDORSEMENT

[1] The appellant 1408803 Ontario Ltd. (c.o.b. DaeWoo Thornhill) appeals from the judgment of Marrocco J. dated August 24, 2006. The trial judge found that the appellant was liable for breach of contract and quantified damages at $7,785.00.

[2] The appellant sold a used 1999 van to the respondent for $20,116.00 on November 4, 2004. He returned the van within two weeks because it did not work properly. In a new contract dated November 17, 2004, he purchased a used van of the same make and year for $20,385.00. The contract of sale stated that the van had been driven for 77,690 km.

[3] In April 2005, the respondent returned this van because it was not working properly. Under a new contract, he purchased a 2003 van for $28,170.00. He received a trade-in allowance of $12,000.00 for the 1999 van on the assumption that it had 92,000 km on the odometer.

[4] The respondent learned in August 2005 that the van under the second contract had had its odometer tampered with, and the van had in fact been driven 202,000 km when he purchased it. He sued the appellant for breach of contract.

[5] The trial judge found that the appellant was liable for breach of contract because it provided the respondent with a van that had travelled 202,000 km rather than 77,690 km, as set out in the contract. He also found that the vehicle was unsatisfactory. He calculated the damages at $7,785.00, the difference between the price paid under the third contract and the price under the second contract. This included the financing charges for each vehicle over the life of each financing contract. He also awarded the respondent costs on a partial indemnity basis because this reflected the appellant’s responsibility to make best efforts to ensure the accuracy of odometer readings on used cars sold to the public. The costs have since been assessed at over $14,000.00.

[6] The appellant has not shown that the trial judge made a palpable and overriding error in finding a breach of the contract for the second van. There was evidence to support his conclusion that there were mechanical problems with this vehicle that rendered it unsatisfactory.

[7] However, the trial judge erred in awarding damages of $7,785.00 based on the difference between the amounts to be paid for the second and third vans, including financing charges. The third van was a newer and more costly one, financed over a longer period of time and for a different amount. Therefore, the trial judge should not have subtracted the total payments under contract #2 from those under contract #3.

[8] The respondent returned the second vehicle because it was unsatisfactory, and he was entitled to damages in light of the return that would have put him in the position in which he should have been, but for the breach. He should have received the base purchase price of $14,900.00 back. Instead, he was credited with $12,000.00 on the trade-in, and that must be taken into account in assessing his damages. While that amount might be seen to reflect the fact that he had the use of the vehicle for several months, the appellant subsequently sold this van to another party for $16,235.50. Therefore, we calculate the respondent’s damages at $2,900.00, plus $800.00 for the period of the extended warranty that had not yet expired, plus the inspection and administrative fees of $645.00 plus applicable GST and PST for a total amount of $4,996.75.

[9] Leave is granted to appeal the award of costs. The trial judge awarded partial indemnity costs to the respondent because of the appellant’s responsibility to ensure the correctness of odometer readings.

[10] The appellant submits that he erred, as the damages recovered are within the monetary jurisdiction of the Small Claims Court; it successfully defended most of the substantive claims against it; and it made an offer to settle for $7,000.00 all inclusive.

[11] Section 134(1)(a) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that an appeal court may make any order that ought to have been made by the court appealed from. Where this court allows an appeal and varies the trial judgement with respect to damages, it will often be required to reassess the order for costs made at trial in light of the judgement on appeal (340182 Ontario Ltd. v. Canadian Railway Co. (1997), 1997 2783 (ON CA), 149 D.L.R. (4th) 575 (C.A.)).

[12] Given that the appellant’s offer to settle was a figure that included costs, we are unable to determine whether the respondent received an amount at trial that was as favourable or less favourable than the offer, as required by Rule 49.10.

[13] Given the fact that the respondent’s damage award has been reduced and that his other claims were dismissed by the trial judge, the costs of this summary trial should be modest. We would fix them at $5,000.00 all inclusive, as that is a fair and reasonable amount for the appellant to pay in a proceeding such as this.

[14] Therefore, the appeal is allowed in part. Paragraph 1 of the judgment is varied to substitute an order for damages of $4,996.75. Paragraph 2 is varied to substitute an order of costs to the respondent in the amount of $5,000.00.

[15] If the parties are unable to agree on costs of the appeal, they may make brief written submissions within 30 days of the release of this decision.

Lederman J.

Swinton J.

H. Spiegel J.

Released: May 10, 2007